Raise the Hammer

Comment 71528

By Inky Wretch (anonymous) | Posted November 22, 2011 at 11:11:31
in reply to Comment 71442

"Spin, however, may be Huffington’s most impressive quality. The AOL ads that flooded the screens in the back of taxis since 2010 are not the only reason that the company has buzz; both she and Armstrong have been good at ignoring AOL’s falling stock price, which is down almost 38 percent this year, though ad sales were up 8 percent last quarter. AOL’s core business is still based on dial-up subscriptions, which are, clearly, completely doomed. In 2002, AOL had 35 million subscribers; today, it has about 3 million, and every year it loses about 30 percent of its base. Shockingly, a majority of those 3 million reportedly have cable or DSL and don’t realize that they don’t have to pay AOL for a subscription.....

The sale price, at $315 million, was highly speculative based on HuffPo’s current numbers. Huffington’s main business partner, Ken Lerer—the former AOL communication director, in fact, though he was pushed out during the Time Warner merger—made, reportedly, between $40 million and $60 million. According to a source, after the checks were written with AOL, he pulled his CEO, CFO, and most of the Huffington Post management team to his ventures, leaving AOL with Huffington, on her own. She did not put money into the website at the outset, and reportedly made $18 million.....

Eventually, about 30 of AOL’s content sections, like Politics Daily and Slashfood, were “integrated” into the Huffington Post, rebranded as HuffPo Politics or HuffPo Food. Employees began saying that there was no merger after all—they just put the two companies together and shut one down, and the net effect was that the company only got larger by about 20 percent.....

The future of AOL, though, is unclear: Though Armstrong maintains Patch will be successful (“It’s a risk worth taking”), it’s currently losing about $140 million a year, and there are weekly stories in the business press about AOL breaking up the company."